Interest rate hike by the ECB – Savings bank boss warns: “Many could lose their house”

Created: 06/15/2022, 15:31

By: Lisa Mayerhofer

The ECB will raise interest rates in the face of inflation in the summer.

The president of a savings bank association warns that this can have dire consequences for borrowers and house builders.

Frankfurt am Main – Good news for savers, bad news for borrowers: At its meeting in Amsterdam last week, the European Central Bank (ECB) set the course for an end to negative interest rates.

For the first time in over a decade, interest rates are set to rise by 0.25 percentage points on July 21.

In September, "a larger rate hike may also be appropriate," according to monetary authorities.

The ECB interest rate hike has consequences for borrowers and home builders

The interest rate hike had been expected by experts in view of the persistently high inflation rate in the euro area.

While savers are likely to be happy about the rising interest rates, borrowers are at a disadvantage: it will be more expensive for them in the foreseeable future.

After all, interest rate increases increase the cost of borrowing.

According to the experience of consumer protection groups, banks and savings banks pass on rising interest rates to borrowers relatively quickly.

The higher interest rates particularly affect those who need a new loan or follow-up financing for a real estate loan.

Home builders in particular can get into trouble this way.

"Many could lose their house," warns Liane Buchholz, President of the Savings Banks Association of Westphalia-Lippe (SVWL), in the

Inflation puts an additional burden on borrowers

If you need follow-up financing for your real estate loan, you have to weigh it up carefully now.

No one can predict with certainty how building interest rates will develop in the medium and long term, says Philipp Rehberg from the Lower Saxony Consumer Center.

Whether a forward loan – i.e. the early commitment to follow-up financing at a fixed interest rate – makes sense must be decided on a case-by-case basis.

"The primary goal should always be to secure the financing so as not to jeopardize the preservation of the property," says the consumer advocate.

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Another problem for borrowers: Inflation and rising food and energy prices leave them with less and less money to pay off the loan or repay the loan.

"Already now, 42 percent of German households no longer have the ability to save," says Buchholz in the

She assumes that 60 percent will be affected by autumn.